Judge Kurt Lewin of the Los Angeles Superior Court yesterday put off deciding whether municipal guaranteed investment contracts are true insurance policies.

Rather than ruling either for or against the claims of bondholders, the judge overseeing the Executive Life conservatorship implored the parties in the case to settle out of court. Plaintiffs include trustees and bondholders for 13 municipal bond issues totalling $1.93 billion.

Sources on the plaintiffs' side of the case said a settlement was highly unlikely, mostly because of the logistics of getting an agreement.

"The problem is that all of the parties that need to make it go are not parties to that lawsuit," said Janice Harwell, a partner at Thelen Marrin, Johnson & Bridges in San Francisco and attorney for plaintiff Texas Commerce Bank. Ms. Harwell pointed out that many bondholders, pension GIC interests, annuitants, and other parties who would be affected by a settlement are not represented.

"There's no way he can avoid deciding," she said. "He would rather that the parties settle, so he wouldn't have to bring the sword down on this Gordian Knot, but I suspect that it will degenerate into rearguing the case.

"The agenda control in this lawsuit has not been all that great," she said.

California Insurance Commissioner John Garamendi has been trying to classify municipal GICs as Class 6 claimants, according to the California Insurance Code, which would result in 100% losses by the municipal GIC interests. The plaintiffs, mostly trustees, argue that the GICs are policies of insurance and should be designated Class 5.

Carl Rubenstein, attorney Mr. Garamendi, was not available for comment late yesterday.

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